Industry pundits have pointed to a quarter per cent rise before the end of the year, with November the most likely month for a hike. A further increase in early 2007 has also been speculated.
However, the firm has claimed even one rise could force over a million people into insolvency.
James Falla, managing director of Thomas Charles, said: “In August, it was found that individual insolvencies were up 10 per cent on last quarter and 63 per cent on the same quarter last year. When rates rise, increased mortgage payments put many under serious financial pressure and management of unsecured debt is bound to suffer.
“If November does see a quarter per cent interest rate hike, these results would suggest we will see the rate of personal insolvencies spike to a level not seen before in Britain.”
The Thomas Charles research found divorcees would be the hardest hit by a rate rise, with 44 per cent of respondents claiming they would be forced to take on further debt or move into insolvency.
Also, women were expected to find it more difficult to cope with a rate increase, with 34.5 per cent admitting they would suffer, compared to 20.8 per cent of men.
However, Richard Barker, product manager, mortgages at Norwich and Peterborough, believed the figure was over-emphasised.
“We, as a lender, are very responsible so we assess if the customer can afford the repayments even if interest rates were to rise. Also we have found a number of customers are now choosing longer-term fixed rate options, which means they are less likely to fall into the debt trap. However, we are very comfortable that we have made sure our customers don’t overstretch themselves even if they are on variable rate products.”
